The Race for Lithium is Heating Up in Latin America

The Race for Lithium is Heating Up in Latin America 1

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As the US remains “grossly unprepared” to meet the exponential increase in demand for lithium over the next decade, it stakes a claim to Argentina’s massive deposits of “white gold.” For Argentina’s benefit, of course. 

The main inspiration for this article was a video conference last week by the Mexican geopolitical analyst Alfredo Jalife-Rahme, titled “The Lithium War Between China and the US.” Until now China has been winning that war handily, mainly because it realized the strategic importance of lithium long before the US, or at least took earlier action to secure supplies. The Asian giant is the number one refiner of processed lithium and the number one maker of lithium batteries.

By 2020, China controlled 76% of global lithium-ion battery production capacity, while the US accounted for just 8%. As Jalife points out, between 2018 and 2021 China spent twice as much money securing lithium mining rights as the four main economies of the Anglosphere (US, UK, Canada and Australia) combined.

Now, the US and its five-eye allies are having to play catch up. Much of their attention will be on Bolivia, Chile and Argentina, the three South American nations whose borders intersect in the highly-elevated salt flats basins known as “the lithium triangle.” This area not only accounts for roughly two-thirds of the world’s known reserves of lithium; its lithium is also much easier to extract than other deposits. It is here where the biggest campaigns of what Jalife calls the “lithium war” will probably be waged. Asked by a listener whether this will mean more coups d’état in the region, Jalife responded, with a wry, weary smile:

Yes, we need to have them on the radar. And attacks. We are going to see some strange accidents. Yep, same as always. The setting is the same,… it’s the resources that are different. This time they are strategic.

According to some reports, Latin America has already suffered one coup d’état over lithium interests. In 2019, Evo Morales, the then-president of Bolivia, the country with the largest lithium deposits on the planet, was toppled by a coup that he blames in large part on companies with commercial interests in the lithium sector, including TESLA whose CEO Elon Musk famously tweeted at the time: “We will coup whoever we want. Deal with it!”

Chile’s Undesirable Constitution

We were reminded of this fact last week when the Bezos-owned Washington Post ran an editorial arguing that Chile’s proposed new constitution needed a significant rewrite before being presented to voters this past weekend. The first reason cited for this is the threat the new constitution’s environmental provisions would pose to American mining companies’ ability to exploit the country’s lithium. As you can see, even the first word of the article is “lithium”:

Lithium is a key input in batteries that run millions of laptops and upon which the United States is basing its electrified automotive future. Chile sits atop the world’s largest lithium reserves; it produced about 25 percent of the world’s commercial supply in 2020. That’s reason enough to pay attention to Chile’s impending Sept. 4 referendum on a proposed new constitution: It could recast the legal framework for mining in the South American nation, which has an 18-year-old free trade agreement with the United States.

This one paragraph almost perfectly encapsulates how Washington views most other countries on the planet — as sources of (ideally cheap) resources. And remember: this is an editorial, not a column, meaning it is the official stance of the newspaper. That is not to say that Chile’s proposed constitution was worth voting for. It had so many flaws in it that it most certainly could have done with a rewriting — just not for some of the reasons expounded by the WP.

In the end, an overwhelming majority of Chileans voted against the proposed constitution, anyway, which will no doubt have pleased Bezos and the Washington establishment his newspaper speaks for (and most of the time to).

Main Target: Argentina

But it isn’t Chile’s lithium that Washington covets the most. It is Argentina’s. The fact that Argentina is also home to the world’s fourth-largest shale-oil reserve and the second-largest for shale gas — the so-called Vaca Muerta (literally meaning “Dead Cow”) oil and gas shale field — is merely the icing on top.

Argentina’s President Alberto Fernández and Economy Minister Sergio Massa will be visiting the US this month, where they will meet up with Joe Biden, the IMF, the Petroleum Club of Houston as well as almost a dozen governors. All of this is purely for Argentina’s benefit, of course, as the US Ambassador to Argentina, Marc Stanley, told a recent gathering of delegates in Buenos Aires.

“The United States wants to have a relationship with Argentina so that it can be a leader in Latin America. Its intention is to help with infrastructure, food, energy, lithium… We don’t need you, but we want to help the world and to partner with you.”

US interest in Argentina’s lithium deposits was already laid out in a report by the Washington-based Center for Strategic and International Studies (CSIS), which somehow found its way to the Instituto Patria, a left-of-center think tank founded by Argentina’s Vice President Cristina Fernández Kirchner. The report was then passed on to the progressive Argentinean newspaper Pagina12. The following is a machine-translated excerpt of the of the resulting article:

“Argentina has the second largest lithium reserves in the world and is the fourth largest producer of lithium carbonate, behind Australia, Chile and China, and contributed 6 percent to the world supply with 33,000 metric tons in 2021,” says Andrew Sady in his report [for CSIS]. “Of the Latin American countries that have lithium reserves, Argentina’s market is most open to private sector investment… The federal government has not imposed any regulation on foreign investment in the lithium sector and allows the market to dictate the development of the industry.” For this reason, “several projections and experts agree that, within the next decade, it is expected to be the country that implements the largest additional production of lithium. Benchmark Mineral Intelligence forecasts an increase of 360% by 2025.”

Another section explains why the United States really needs Argentina, and not the other way around: on the board where the mineral known as white gold is increasingly in demand for the transition to clean energy — car production in the middle — , a possible global shortage is expected by 2030, by which point China is expected to control 80% of the production chain. And Argentina, with its Latin American neighbors, will continue to offer the only easily extracted reserves.

It reads: “Given the geopolitical trade war with China, China could use its position to steer the future of the global transition to clean energy. Given the current state of the lithium supply chain, the United States is grossly unpreparedto meet the exponential increase in demand over the next decade and beyond. Investments and coordination with US allies and partners will be required, he notes, “as recommended in the White House’s 100-day review of Executive Order 14017 on supply chains.”

The Race for the World’s Resources Heats Up

In other words, the issue is now of basic national security interest to the US. Ominously, in June the US signed a “minerals security partnership” (MSP) with some of its strategic partners, including the European Commission, Canada, Australia, Japan, the Republic of Korea and the UK. In an accompanying press statement, the US Department of State said:

“The goal of the MSP is to ensure that critical minerals are produced, processed, and recycled in a manner that supports the ability of countries to realise the full economic development benefit of their geological endowments.”

It is probably no coincidence that this is happening at the same time that the three lithium- triangle countries, as well as Mexico, are beginning to talk about setting up a price-setting consortium of lithium producing countries based loosely on OPEC. Bolivia has already nationalized its lithium deposits while Mexico’s President AMLO recently has set up an autonomous state-owned agency to oversee the development of lithium mining and ensure the nation is benefiting from the white metal’s exploitation.

Not everyone in the Argentinean government is on board with the idea of flinging the doors open to US investment in the sector. On August 30, Argentina’s Vice President Cristina Fernández Kirchner, who has already served two terms as president of the country, warned in a speech to the Senate that “they are coming [for the lithium]. We have to keep an eye on this,” adding: “When we are all happy because we have food, energy and lithium, let’s not just be happy. Let’s also pay attention. Because they are going to want to take it away without giving us anything.”

Assassination Attempt

Last Thursday evening, as NC readers are no doubt aware, a 35-year old Brazilian-born Uber driver called Fernando André Sabag Montiel tried to assassinate Fernández de Kirchner, often referred to as CFK, as she greeted supporters outside her home. Fortunately, the would-be assassin’s semi-automatic pistol failed to fire and he was immediately arrested. Now begins the long, hard job of trying to piece together what happened.

Was Sabag Montiel working alone? He certainly appears to have close ties with far-right groups as well as a penchant for Nazi tattoos. Was he working with somebody else? Was he working for someone else? Given how much of a hash he made of the job, that seems implausible but not entirely out of the question.

Could it have been an inside job (as in, a fake assassination), as many CFK detractors on the right want to believe? Again, this is unlikely but not beyond the realms of possibility. After all, Fernández de Kirchner, often referred to as CFK, is currently on trial for corruption. If found guilty, she faces up to 12 years in prison. Her defense team are already calling for the charges to be dropped because of the assassination team.

The parallels with Brazil’s former (and quite probably future) President Luiz Inácio Lula da Silva are striking. Lula was jailed for corruption during the lead up to the 2018 general elections on spurious charges, which he would almost certainly have won. An exposé last year by The Intercept revealed the extent to which the US Department of Justice orchestrated the now-disgraced Operation Car Wash in Brazil, which led to the downfall of Dilma Rousseff’s government, the imprisonment of former President Lula just as he was preparing to run for office again, and the eventual election of far-right president Jair Bolsonaro.

If she can stay out of jail, CFK would also be a strong, perhaps even unbeatable, candidate, in Argentina’s presidential elections next year. If that were to happen, she would be far less likely to give away Argentina’s crown jewels as willingly as the current dollar-starved government. She would also be more likely to drive a tougher bargain in negotiations with the IMF, just as her husband, Nestor Kirchner, did before her. None of which is in Washington’s interests.

For the moment, there are few certainties and myriad unknowns around the attempted assassination of CFK. It hardly helps matters that the police investigating the case appear to have “accidentally” wiped Sabag Montiel’s mobile phone.

It cannot be entirely ruled out just yet that Washington ordered the job, although Sabag Montiel does appear to fit the lone wolf profile pretty snugly. Nonetheless, when it comes to offing Latin American presidents, Washington has plenty of form, though US-sponsored assassinations of senior political figures in the region are thankfully rare these days. It also has motives a plenty.

 

 

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